A.  Basis for preparation of accounts
 
 i) The financial statements have been prepared to comply in all
 material respects with the mandatory Accounting Standards issued by the
 Institute of Chartered Accountants of India and the relevant provisions
 of the Companies Act, 1956. The financial statements have been prepared
 under the historical cost convention using accrual method of accounting
 in accordance with the generally accepted accounting principals.
 
 ii) Accounting policies not specifically referred to otherwise are
 consistent with generally accepted accounting principles followed by
 the Company.
 
 B.  Use of Estimates
 
 The preparation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of the financial statements and the reported
 amount of revenues and expenses during the reporting period. Difference
 between the actual results and estimates are recognized in the period
 in which the results are known /materialized.
 
 C.  Own Fixed Assets and depreciation
 
 i) Fixed Assets are stated at cost net of recoverable taxes and
 includes amounts added on revaluation, less accumulated depreciation
 and impairment loss, if any. All costs including financing cost till
 commencement of commercial production attributable to fixed assets are
 capitalized.
 
 ii) Depreciation on fixed assets other than vehicles and furniture is
 provided on straight line method at the rates and in the manner
 prescribed in schedule XIV of the Companies Act, 1956. Depreciation on
 vehicles and furniture has been provided on written down value method.
 
 iii) The depreciation on plant and machinery and effluent treatment
 plant has been provided on the rates applicable to continuous process
 plant.
 
 D.  Impairment of Assets
 
 An asset in treated as impaired when the carrying cost of asset exceeds
 its recoverable value. An impairment loss in charged to the profit and
 loss account in the year in which an asset is identified as impaired.
 The impairment loss recognized in prior accounting period is reversed
 in there has been a change in the estimate of recoverable amount.
 
 E.  Foreign Currency Transactions
 
 i) Transactions denominated in foreign currency are recorded at the
 exchange rate prevailing on the date of transaction or that approximate
 the actual rat at the date of the transaction.
 
 ii) Any income and expense on account of exchange difference either on
 settlement or on transaction is recognized in the profit and loss
 account except in the case of long term liabilities, where they relate
 to acquisition of fixed assets, in which case they are adjusted to the
 carrying cost of such assets.
 
 F.  Investments
 
 Long term investments are stated at cost. Provision for diminution of
 the value of long term investments is made only if such a decline is
 other than temporary.
 
 G.  Inventories
 
 i) Inventories are valued at the lower of cost and net realizable
 value. The cost is computed on First in First out (FIFO) basis.
 
 ii) Cost for the purpose of valuation of finished goods and goods in
 process is computed on the basis of cost of material, labour and other
 related overheads.
 
 iii) Scrap stock is valued at estimated realizable value.
 
 H.  Revenue recognition
 
 i) Revenue is recognized to the extent that is probable that the
 economic benefit will flow to the Company and the revenue can be
 reliably measured.
 
 ii) Sales are recognized when goods are supplied and the significant
 risks and rewards or ownership of the goods have passed to the buyer.
 
 iii) Dividend income is accounted in the year in which it is received.
 Interest income is recognized on time proportion basis taking into
 account the amount outstanding and rate applicable.
 
 I.  Employee Benefits
 
 i) Short term benefits employee benefits are recognized as an expense
 in the profit and loss account of the year in which the related service
 is rendered.
 
 ii) Post employment and other long term employee benefits are
 recognized as an expense in the profit and loss account for the year in
 which the employee has rendered the services. The expense is recognized
 at the present value of the amounts payable determined using actuarial
 valuation techniques. Actuarial gains and losses in respect post
 employment and other long term benefits are charged to the profit and
 loss account.
 
 J. Borrowing Costs
 
 Borrowing costs that are attributable to acquisition or construction of
 a qualifying asset are capitalized as a part of cost of such assets.
 Qualifying asset is one that necessarily takes substantial period of
 time to get ready for its intended use. All other borrowing costs are
 recognized as expenses in the period in which they are incurred.
 
 K. Provision for Current and Deferred Tax
 
 Tax expense comprises both current and deferred taxes. Deferred Income
 Taxes reflect the impact of current year timing differences between
 taxable income and accounting income for the year and reversal of
 timing differences of early years. Deferred tax is measured based on
 the tax rates and the tax laws enacted or substantively enacted at the
 balance date. Deferred tax assets are recognized only to the extent
 that there is reasonable certainty that sufficient future taxable
 income will be available against which such deferred tax assets can be
 realized. Deferred tax assets are recognized on carry forward of
 unabsorbed deprecation and tax losses only if there is virtual
 certainty that such deferred tax assets can be realized against future
 taxable profits. Unrecognized deferred tax assets of earlier years are
 reassessed and recognized to the extent that it has become reasonably
 certain that future taxable income will be available against which such
 deferred tax assets can be realized.
 
 L. Segment Reporting
 
 The company produces only Paper and accordingly the entire business has
 been considered as one single segment. The secondary segment is
 geographical determined based on the location of clients. Clients are
 classified as either India or Overseas.
 
 M. Provisions, Contingent Liabilities & Contingent Assets
 
 Provisions involving substantial degree of estimation in measurement
 are recognized when there is a present obligation as a result of past
 events and it is probable that there will be out flow of resources.
 Contingent liabilities are not recognized but are disclosed in the
 notes. Contingent assets are neither recognized nor disclosed in the
 financial statements.